The Government's Anti-Foreclosure Program Has Lead To Many People Getting Scammed

foreclosure reduced price

Photo: David McNew/Getty Images

The foreclosure crisis has provided a number of opportunities for everyone from investors and potential homebuyers to scammers. As investors take advantage of incredibly low home prices that are well below market value, scammers take advantage of struggling homeowners.Foreclosure Programs Attract Scammers

What, exactly, does an increase in anti-foreclosure programs supported by the White House have to do with scammers?

The White House has paid a substantial amount of attention in providing lenders with incentives for helping homeowners facing foreclosure stay in their home. Although these incentives (and the goal behind this somewhat controversial plan) are aimed to help homeowners, many scammers are taking advantage of these foreclosure programs, often conning money out of struggling homeowners.

Homeownership Preservation Foundation

The Homeownership Preservation Foundation offers a 24 hour a day, every day Hope Hotline, which aims to assist homeowners facing foreclosure. By simply calling 888-995-HOPE, struggling homeowners can receive free advice to help them avoid foreclosure and receive information about government-backed programs.

This priceless program has recently discovered that scams involving mortgage foreclosures have increased approximately 60% so far this year.

The increase is due to the raise in government-backed programs designed to assist homeowners facing foreclosure. With many homeowners seeking to save their homes and knowing that government-backed programs exist in an effort to alleviate some of the burden, they are actively seeking assistance. The problem is that some of the assistance being provided is a scam and is not a government-backed program. Therefore, as government-backed programs increase, so do the foreclosure prevention scams.

They Key to Avoiding These Scams

They key to avoiding scams involves looking for one thing—a charged fee. With government-backed programs being completely free (for example the Hope Hotline), the key to detecting a scam is that the scammers charge a fee for their services.

Not only are scammers charging fees for services that struggling homeowners can receive for free, but they are also providing subpar services and advice—or failing to provide services altogether.

Therefore, homeowners in need should immediately run from foreclosure prevention programs that claim to help you save your home for a fee. Instead, rely on free services offered by nonprofit organisations like the Homeownership Preservation Foundation and work directly with your lender to see if you can receive assistance as a result of the incentives being offered to lenders helping families avoid foreclosure.

In the end, as government-backed programs have started to rise scams have also started to increase. When looking for foreclosure assistance avoid fees and look for free

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.